Housing Market Segmentation and Sorting
Friday, Jan. 3, 2020 10:15 AM - 12:15 PM (PDT)
- Chair: Jenny Schuetz, Brookings Institution
Heterogeneous Households and Market Segmentation in a Hedonic Framework
AbstractThis paper explores Rosens (1974) suggestion that within the hedonic framework there are natural tendencies toward market segmentation. We show that market segmentation can be estimated on the basis of an augmented hedonic model in which marginal prices are separated by household characteristics into different classes. The classes can either be exogenously defined or endogenously determined based on an unsupervised machine learning algorithm or a latent class formulation. We illustrate the usefulness of these methods using American Housing Survey data for Louisville and show that there are distinct housing market segments within the Louisville metropolitan area based on income and family structure.
Household Sorting in an Ancient Setting
AbstractWe use archaeological data from two different ancient settlements of different historical eras on a Greek island to construct novel measures of wealth. Using these, we show that the wealthy tended to live closer to the center of the settlements. We build a monocentric city model with heterogeneous households, luxury goods and endogenous labor choices that is consistent with the rich living closer to the center. This result holds when transportation costs within the model are predominately time costs, as they mostly were in ancient history.
Immigration and the Pursuit of Amenities
AbstractImmigrants to the United States live disproportionately in metropolitan areas where nominal wages are high, but real wages are low. This sorting behavior may be due to preferences toward certain quality-of-life amenities. Relative to U.S.-born inter-state migrants, immigrants accept lower real wages to locate in cities that are coastal, larger, and offer deeper immigrant networks. They sort towards cities that are hillier and also larger and networked. Immigrants come more from coastal, cloudy, and safer countries -- conditional on income and distance. They choose cities that resemble their origin in terms of winter temperature, safety, and coastal proximity.
- R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location
- J1 - Demographic Economics